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Citi Files for Reverse Stock Split, Exchange Offer

In an effort to build up its capital, New York-based Citigroup is filing with the Securities & Exchange Commission to issue its common stock in exchange for publicly held convertible and non-convertible preferred and trust preferred securities. According to a statement issued by the bank, Citi anticipates launching the public exchange offer in early April, subject to completion of the required SEC review process

Citi hopes to file two preliminary proxy statements with the SEC. One proxy proposes to amend Citi's charter to increase the number of authorized shares of its common stock and authorize the board of directors to execute a reverse stock split of its common stock, among other proposals. The other preliminary proxy proposes to amend the charter and the certificates of designation of each series of its public preferred stock to amend the rights of holders of public preferred stock.

In addition, Citi also has entered into definitive agreements with all of the private holders of convertible preferred securities with an aggregate liquidation value of approximately $12.5 billion that were issued in January 2008. Completion of the private exchange transaction is subject to customary closing conditions.

Additionally, Citi is seeking to exchange approximately $27.5 billion in public and private preferred securities with a commitment from the U.S. Treasury to convert up to an additional $25 billion of its preferred securities for common stock, in keeping with a Feb. 27 announcement. Citi will convert into approximately $52.5 billion in aggregate liquidation preference of preferred shares into common shares, provided there is full participation from public preferred shareholders.

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